How to secure Private MOney or HML for Auction Properties

Question

Hi

I'm attending an auction and would like to know if any current lenders offer financing for Auction properties. I will have 14 days to close post-auction in Ohio

Igor Ganapolsky · Answer

Since you've bought at auction before with cash, the main thing that changes with 14 days to close in Ohio is speed of underwriting, not the loan product. A few things that have helped people I know bid with borrowed money: get fully underwritten with the lender BEFORE the sale (credit, entity docs, proof of liquidity, track record) so the only open item after you win is the property file. Ask each lender two blunt questions up front: can you fund without interior access/appraisal, and what is your actual doc-to-wire timeline, not the marketing one. Many auction-friendly hard money lenders will do a drive-by BPO or desktop val and lend on purchase price rather than value, so plan on 30-50% of your own cash in the deal plus rehab holdback.

Also check the sheriff sale terms for your county - some Ohio counties want 10% deposit day-of and the balance in 30 days, and confirm whether the confirmation of sale timeline extends your window (it often does, which takes pressure off).

Practical backstop: line up a private lender (individual, not a fund) as plan B with a signed term sheet and proof of funds letter in your name before the auction. Cost more in rate/points, but it beats losing your deposit. And title - order an O&E/title search before bidding so a junior lien or an unpaid tax cert doesn't blow up the funding at day 12.

AJ Exner · Answer

@Jodi-Ann Birch that's awesome, utilizing debt well can help scale if you are used to the process.

Biggest thing is not only making sure that the lender can close in that time, but also that they provide the flexibility in case the deal is lower (you get a better deal then you think) or if the deal is going to require more rehab than anticipated.

AJ Exner · Answer

Hey Jodi-Ann,

I would walk through the deal with the lender first. Plenty of HMLs could do 14 days post-auction, I would work with a group that could maybe do some preliminary underwriting and help you get a pre-qualification letter and then get ready to lock in once you win the auction and get it under contract.

Especially because there can be things like minimum values and ARV constraints that you will want to have before you get into it

Is this your first auction deal?

Jodi-Ann Birch · Answer

No its not my first auction purchase. I have purchased several auction properties over the years but they were cash which has its limits.  So I wanted to know if there is a better option.